Outsourcing: a whole new model

It may not be the route Canadian organizations are choosing to take today, but according to Accenture, the business transformation outsourcing (BTO) model represents a fundamental way organizations could view and understand outsourcing down the road.

The generally more traditional view of outsourcing implies handing over certain aspects of an organization’s IT department to a service provider. The company may choose to outsource its help desk needs, or aspects of the business that are clearly defined as non-core to its businesses operations.

The BTO model, however, looks at both the technological and business side of a company’s needs. Essentially, it examines the organization’s need to dramatically shift how it operates or how to remedy a situation if the company has missed the boat in some sense.

For example, a bank’s CEO may have decided that electronic cheques were a concept that wouldn’t catch on with Canadian banking customers. A year later, that bank sees its market share decline and the e-cheque concept revolutionizes the banking industry as we know it.

“The assumption is your company needs transformation (which is a legitimate question) and you don’t have the capabilities and resources to do it yourself. You (may) want to partner with another company who can give you the critical skills and processes that you need to do business in a very different way,” said Jane Linder, the associate director for the institute of strategic change at Accenture in Cambridge, Mass.

Fundamentally, what would normally be outsourced hasn’t changed. Instead, this concept forces the business to examine its own goals or agenda, and to look internally at both the existing technologies it has and its business model. The company would have to decide where it wants to be in 18 months time, up to five years into the future. Or, it could mean that beyond the cost cutting that is typically associated with outsourcing, BTO would address the company’s need to become more competitive or profitable.

“It’s the notion that whatever it is you’re outsourcing is the critical roadblock to trying to achieve your transformational goals…It’s a different agenda,” Linder said.

It is not however, ideal for all organizations to pursue the BTO model. But for those outfits that need change and find this as an attractive alternative, Accenture typically provides hardware, software, methodology strategies and staffing requirements.

To date, Accenture said there are no Canadian companies on record who have engaged in this model. To boot, an International Data Corp. Canada spokesperson said there aren’t even numbers available to track the BTO market in this country.

“BTO is more of a concept, it’s a change in philosophy (than) in anything really different from the way things have been done in the past,” said Jason Bremner, senior outsourcing analyst at IDC in Toronto.

While he agreed with the dense interpretation surrounding the model as one that looks at where business projects evolve to from an IT and business view point, it is a model that could be suitable for all outfits.

“It could be for everybody if they want to say that down the road we want to fundamentally change our business and go to a service provider,” Bremner said.

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Jim Love, Chief Content Officer, IT World Canada

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